Assigned by the Swedish Government for implementation including financing arrangements.

Estonian Climate responsible Organisation

Street:

Kungsgatan 43

Toompuiestee 24

Post code:

BOX 310, S-631 04

10149

City:

Eskilstuna

Tallinn

Country:

Sweden

Estonia

Telephone:

+46 16 544 20 00

+372 62 62 800

Fax:

+46 16 544 22 64

+372 62 62 801

E-mail:

klas.tennberg@stem.se

WWW-URL:

http://www.stem.se

Contact person (for this activity):

-------------------------------------

-------------------------------------

Surname:

Knutsson

Kratovits

First name, middle name:

Gudrun

Andres

Job title:

Senior officer

Counsellor

Direct tel:

+46 16 544 20 72

+372 62 62 841

Direct fax:

+46 16 544 22 64

+372 62 62 845

Direct E-mail:

gudrun.knutsson@stem.se

andres@ekm.envir.ee

(* From 1 January, 1998, the new Swedish National Energy Administration has taken over the
responsibility for the Programme for an Environmentally Adapted Energy System in the Baltic region and
Eastern Europe (EAES Programme) from NUTEK (Swedish National Board for Industrial and Technical
Development).

Võru town is the administrative and economic centre of Võru county, located in
south-eastern Estonia. The number of inhabitants of Võru town is approx. 16500. There are
several boiler plants and district heating networks. In the biggest Võrusoo boiler plant
there were three oil-fired DE 25-14 (25 tons steam per hour) steam boilers, designed to burning oil
and gas. One of these mazout fuelled boilers has been converted to biofuels. The converted boiler
will be used as the base-load boiler.

Type of project:a)

Fuel switching to biofuels

Location (exact, e.g. city, region,

state):

Võru town

Vöru county

Estonia

Activity starting date:

13 January 1994 (Letter of Intent)

In operation from:

August 1994

Expected activity ending date:

10. October 2004

Stage of activity:b)

completed

Lifetime of activity if different from ending date:c)

Expected technical lifetime is 15 years which means that the plant is expected to be in operation
till 2010.

Technical data:d)

An existing mazout fired DE 25-14 boiler has been converted to biofuels firing through installation
a pre-furnace. Automatic fuel storage, flue gas cleaning equipment, wood chipper and additional oil
burner are also included in the project.

c) Methodological work will be required to define lifetime of activities.

d) Methodological work will be required to determine for each type of activity what the minimum data
requirements are.

The life time criteria has been arranged in different groups depending on type of implemented activities.
This classification assumes a level of operation and maintenance which is normal

in western countries.

Lifetime of activity

Heat production plants (bio fuel)

25 years

New installation of all main equipment parts (fuel handling system, firing equipment and boiler)
and modernisation of secondary equipment.

15 years

Conversion of existing boiler but new installation fuel handling system and firing equipment.
Modernisation of secondary equipment.

10 years

Limited installation of new equipment (only one part of the three main parts, normally the firing
equipment). Modernisation of other equipment.

Heat distribution systems and sub-stations

25 years

Pre-fabricated pipes and installations using certified contractors and supervisor according to EN
norms and applicable district heating practise

15 years

Pre-fabricated pipes and installations without using certified contractors and supervisor

10 years

Modernisation of existing pipes.

Energy efficiency in buildings

25 years

Additional insulation roofs walls etc. with Scandinavian technology.

New installed heating systems.

15 years

Renovation and balancing of heating systems including thermostat valves.

10 years

Weather stripping windows, doors etc.

* if a combination of measures is done a reasonable lifetime for the project have to be calculated.

4) Cost (to the extent possible):

To the investment costs are referred the cost of the investment proper and the accumulated interest during
the grace period, generally 2 years.

The AIJ/JI cost items are the costs for:

Technical assistance, a technical and administrative support from consultants, during the period from
definition of the project till commissioning. These costs are paid by STEM.

Follow-up, an annual technical and economic follow-up by consultants, hired by STEM, of the operating
results of the plant with the objective to improve on its techno-economic sustainability and its climate
effect. The cost indicated is an average cost per project.

Administration –Costs for seminars, handbooks, education (capacity building) and average costs of
STEM staff per project.

Difference in interest rates. STEM applies for its loans generally an interest rate corresponding to
6-month STIBOR (Stockholm InterBank Rate, in April 1999 3,0 %). Assuming a normal lending rate of 7 % means
that this loan is associated with a cost of 4 % in relation to normal lending rate.

Investment/instalment = the borrower’s possible own financing of the investment, followed by the
borrower’s repayment of the loan.

All costs in USD

Country

Võru BC

1994

1995

1996

1997

1998

0

1

2

3

4

Investment

1. Loan/debt to STEM

625000

625000

557250

487500

417750

2. Added costs

0

0

0

0

0

3.Technical assistance

87500

0

0

0

0

AIJ/JI

4. Follow up

0

8750

10250

10625

2750

A. Sweden

costs

5. Reporting costs

0

0

0

1063

0

6. Administration

63750

0

0

0

0

7. Difference in interest

4%

25000

22290

19500

16710

8.Accum. costs for AIJ/JI

151250

185000

217540

248728

268188

9.Total costs

776250

810000

774790

736228

685938

Investment

1. Investment/Instalment

0

0

67750

69750

69750

2. Estonia

AIJ/JI

2. Reporting costs

0

0

0

0

0

costs

3. Other costs

0

0

0

0

0

4. Accum. costs for AIJ/JI

0

0

0

0

0

5. Total costs

0

0

67750

137500

207250

1 USD=

8

SEK

5) Mutually agreed assessment procedures:

Describe the procedures, including name of organisations involveda):

Ministry of the Environment of Estonia is a central Estonian authority responsible on reporting of
JI projects. This authority assigns a local institution, which is involved in to the evaluation of
the climate effects of this project and takes the main responsibility to continue measuring,
results collecting for JI-reporting.

a) Please ensure that detailed contact information for all organisations mentioned is reported under

section A.2 above.

B. Governmental acceptance, approval or endorsement

Bearing in mind that all activities implemented jointly under this pilot phase require prior acceptance,
approval or endorsement by the Governments of the Parties participating in these activities, which shall be
shown as follows:

(a) In the case of joint reporting, the report is submitted by the designated national authority of one
participating Party with the concurrence of all other participating Parties as evidenced by attached
letters issued by the relevant national authorities;

(b) In the case of separate reporting, the reports are submitted separately by the designated national
authority of each and every participating Party. Information will only be compiled once reports have been
received from all participating Parties.

1) For the activity:

* Subsequent reports:

Second report . First report was submitted 1997.

2) This report is a joint report:

Yes, Agreement with designated national authority was signed 1997.

3) General short comment by the government(s) if applicable:

cf. Annex II, section B

C. Compatibility with and supportiveness of national economic development and socio economic and
environment priorities and strategies

Describe (to the extent possible) how the activity is compatible with and supportive of national
economic development and socio economic and environment priorities and strategies

The project meets the following objectives in the Estonian Energy Law and the Long-term Development
Plan for the Estonian Fuel and Energy Sector:

- efficient use of energy resources;

- to increase the share of renewable energy sources in the primary energy demand from present 8% to
13% to the year 2010;

- to reduce the environmental damage arising from fuel and energy production, transport, conversion
and distribution;

- to create the reliable energy conservation system stimulating the implementation of energy
conservation measures by consumers;

- to develop co-operation between Baltic, Nordic and Central European countries

D. Benefits derived from the activities implemented jointly project

Whenever possible, quantitative information should be provided. Failing that, a qualitative description
should be given. If quantitative information becomes available, it could be submitted using the update(s).
(If the amount of quantitative information is too large, the source could be indicated.)

Item

Please fill in

Describe environmental benefits in detail:

Annual emission reduction:

Projected: 1998

12067 ton CO2 14319 ton CO2

184 ton SO2 218 ton SO2

4 ton NOx 5 ton NOx

Lower pollution in town

Improved silviculture

Do quantitative data exist for evaluation of environmental benefits?

Yes. Some measurements have been carried out in 1994.

Describe social/cultural benefits in detail:

More stable energy supply

Improved working conditions, increased motivation

More employment (new fuel and service companies),

Improved trade balance

Do quantitative data exist for evaluation of social benefits?

Yes . Some reports have been produced

SEI case study

Involved into "Surrey -project" in 1997

Describe economic benefits in detail:

Decreased fuel costs approx. 3,5 USD per MWh.

The boiler plant has the lowest productions costs (include capital costs) in town.

The boiler plant has started with loan amortisation prematurely.

Do quantitative data exist for evaluation of economic benefits?

Yes. Some reports have been produced.

SEI case study

Involved into "Surrey -project" in 1997

Calculation of the contribution of activities implemented jointly projects that bring about real,
measurable and long-term environmental benefits related to the mitigation of climate change that would
not have occurred in the absence of such activities

1) Estimated emissions without the activity (project baseline):

Description of the baseline or reference scenario, including methodologies applied:

Present data reflect emission reductions using calculations, according to the top-down baseline method for
emissions from heat sector in Estonian. (Top- Down Baselines setting for the revised Calculations of CO2
emission Reduction, SEI-Tallinn, Estonian Energy Research Institute, May 1999, Tallinn)

2) Estimated emissions with the activity:

Description of the scenario, including methodologies applied:

Emission reductions are calculated using the IPCC Guidelines, using the Carbon Emission Factor (CEF) for
different types of fuel, using actual system efficiency. For boiler conversion, the decrease in emissions
is calculated in relation to the amount of fossil fuel replaced (status quo).

For an energy efficiency project the decrease in emissions reflects the amount of fuel that is saved
through the project. In the case that the system uses renewable fuels, the reduction is calculated
comparing the amount of fossil fuels that was used before the conversion to renewable fuels.

Below comparison is based upon that the base-line scenario represents a status quo solution.

Fill in the following tables as applicable:

Summary table: Projected emission reductions:

GHG

Year 1

=1994

Year 2

=1995

Year 3

=1996

Year 4

=1997

Year 5

=1998

...

Year 15

Planned energy production on biofuels MWh/year

15700

35 000

35 000

35 000

35 000

35 000

A) Project baseline scenario (revised)

CO2

4842

10563

10178

10075

9972

8674

CH4

-

-

-

-

-

N2O

-

-

-

-

-

other

-

-

-

-

-

B) Project activity scenarioa)

CO2

0

0

0

0

0

0

CH4

-

-

-

-

-

N2O

-

-

-

-

-

other

-

-

-

-

-

C) Effect ( B-A )

CO2

-4842

-10563

-10178

-10075

-9972

-8674

CH4

-

-

-

-

-

N2O

-

-

-

-

-

Other

-

-

-

-

-

D) Cumulative effect

CO2

-4842

-15406

-25584

-35659

-45631

-146369

CH4

-

-

-

-

-

N2O

-

-

-

-

-

Other

-

-

-

-

-

Includes indirect GHG leakages.

Summary table: Actual emission reductions:

GHG

Year 1

= 1994

Year 2

= 1995

Year 3

=1996

Year 4

=1997

Year 5

=1998

...

Year 15

Factual energy production on biofuels

11084

30479

33100

43150

41531

41531

A) Project baseline scenario (revised)

CO2

3626

9401

9990

12548

11955

10375

CH4

-

-

-

-

-

N2O

-

-

-

-

-

other

-

-

-

-

-

B) Project activity scenarioa)

CO2

0

0

0

0

0

0

CH4

-

-

-

-

-

N2O

-

-

-

-

-

other

-

-

-

-

-

C) Effect ( B-A )

CO2

-3626

-9401

-9990

-12548

-11955

-10375

CH4

-

-

-

-

-

N2O

-

-

-

-

-

Other

-

-

-

-

-

D) Cumulative effect

CO2

-3626

-13028

-23018

-35566

-47521

-168600

CH4

-

-

-

-

-

N2O

-

-

-

-

-

Other

-

-

-

-

-

Includes indirect GHG leakages.

F. Additionality to financial obligations of Parties included in Annex II to the Convention within the
framework of the financial mechanism as well as to current official development assistance flows

Please indicate all sources of project funding.

Category of funding

(For each source one line)

Amount

(US dollars)

Loan from NUTEK

667 000 USD

Grant from NUTEK for technical assistance

92 743 USD

1 USD = 7.50 SEK

G. Contribution to capacity building, transfer of environmentally sound technologies and know-how to
other Parties, particularly developing country Parties, to enable them to implement the provisions of the
Convention. In this process, the developed country Parties shall support the development and enhancement of
endogenous capacities and technologies of developing country Parties

Transfer of environmentally sound technologies and know-how

Describe briefly

Schematically, the transfer of knowledge involves the following activities over time:

i) Technology transfer through STEM technical specialist during the implementation of the project.

ii) Technology transfer through co-operation between foreign supplier and local partner

iii) Conferences, seminars, documentation and training.

iv) Stimulate "net-working" for the exchange of experience between plant owners with
similar problems, e g "bio-clubs"

Technology transfer has taken place through:

STEM technical specialist support to the local project leader and municipality;

Knowledge in negotiations to foreign companies;

Knowledge in managing and planning of industrial projects;

Transferring of environmental issues to the local parties;

Transferring of knowledge in operation and maintenance issue;

Operation and maintenance software was introduced to the plant-owners.

Personal from boiler plant has been invited to different seminars and work-shops and
several presentations about company experience have made, documentation for training has been
handed over.

There were arranged seminars through close cooperation between STEM and Estonian partners:

iv)Activities have been supported by STEM to establish Estonian Biofuels Association: meetings
representatives of plant owners and consultants were arranged in Haabneeme, Valga, Võru,
Tartu, Pärnu and Viljandi.

Boilerplant has been visited by specialist of other boilerplants (incl. From Russia, baltic
Coutries), the staff has an exchange of experience with other boilerplants and was active in
"bio-club". Estonian Biofuels Association is established in 1998 ( mainly by
"bio-club" and local experts).

H. Additional comments, if any, including any practical experience gained or technical difficulties,
effects, impacts or other obstacles encountered

Fill in as appropriate:

Any practical experience gained:

Good training and experience of the staff is necessary to operate biofuel boiler at full capacity. The
motivation of the staff to learn is very important to get good results.

The concrete surface in the automatic storage below the scrapers has been partly damaged. The metal sheets
were installed under the scrapers to avoid concrete surface wearing problems. For the future boiler
conversions it is important to demand fulfilling certain quality requirements for surface under the
scrapers in the automatic fuel storage.

2) Technical difficulties:

To get the managers understanding about maintenance of existing equipment in co-operation to the new.

The short brakes in the production had to made for cleaning of the boiler convective part tubes after 2-3
months operation time.

The maximum output capacity was not reached during the guarantee period until the pre-furnace construction
improvements have been made by supplier. After rebuilding the full capacity was reached.

The additional oil burner has been in the operation about 700 hours during the first two years. Deposits
which formed in the convective part of the boiler during oil-burner operation disturbed the normal work of
the boiler. At the present time the oil-burner is not in operation.

There have been problems with combustion with an excess air.

3) Effects encountered:

Several local companies have participated in the project

Execution of the follow up and monitoring activities to get feedback to the programme and for evaluation of
the results of the different measures.

Consulting support from both Swedish and Estonian side, also after commissioning.

4) Impacts encountered:

5) Other obstacles encountered:

Lack of a strong national focal point to support and promote biomass energy activities.

6) Other:

The converted boiler isn’t sufficiently loaded during two last years summer time due to diminishing
domestic hot water consumption ( approx. 2 GWh )

No subsidies to renewables, taxation policy is not in support of biofuel use.